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Republished with permission from The Capitol Forum, Vol. 6 No. 15; January 12, 2018. For the full story, click here.

Independent pharmacists are urging state insurance regulators - as part of their reviews of the CVS/Aetna merger - to examine CVS Health’s recent move to slash smaller rivals’ prescription reimbursements and then offer to buy their stores.

The reimbursement cuts, some of which involved drugs used to treat digestive illnesses and other chronic conditions, occurred around October 25—five weeks before the December 3 Aetna deal announcement, a dozen independent pharmacists said. The cuts affected pharmacies in a number of states, including Florida, Kansas, Maryland, Ohio, Washington, and Wisconsin.

The cuts were both sudden and steep: one pharmacy went from earning $41.63 for [one drug]to losing $72.27 per sale of the treatment. In another case, CVS-owned Caremark, the second-largest U.S. pharmacy benefit manager, paid just over 5 percent of the $2,237.08 a pharmacy spent on [another drug].

“The reimbursement rates in question are established using aggregate information from wholesalers, third party sources and marketplace intelligence and are subject to change frequently,” a CVS spokesperson said, as part of a longer statement included below.

Pharmacists allege “squeeze and buy.” The independent pharmacists said in the weeks following the drastic reimbursement cuts, CVS faxed and e-mailed these same pharmacies solicitation letters asking if they were interested in selling their businesses to the chain, the nation’s second largest.

“In our fourth quarter, the reimbursements from CVS Caremark were shockingly low,” explained one independent pharmacist affected by the reimbursement cuts. “We don’t even know if we’ll survive 2018,” the pharmacist added. “These are crooked games,” said another independent pharmacist. “These are tactics and practices to squeeze [independent pharmacists] out of the market.”

Two sources present at the exchange also said that during a meeting with a Maryland state insurance regulator and independent pharmacy representatives around the time of the cuts, a CVS lobbyist assured the regulator that the reimbursement cuts were simply a computer glitch...